Revenue of Ukrainian Railways falls 10%, bottom line improves in 1Q21

Ukrainian Railways (RAILUA) generated UAH 18,012 mln
(USD 644 mln) of net revenue in 1Q21, or 10% less yoy, according to its unaudited
financial report distributed by marlin.org.ua news site. Its operating loss
decreased 87% yoy to UAH 821 mln (USD 29 mln) and net loss decreased 76% yoy to
UAH 1,675 mln (USD 60 mln). Ukrainian Railways was able to decrease salary and
social expenses by 10% yoy to UAH 10,103 mln in 1Q21, keeping them at 56% of
net revenue. The results imply the company’s EBITDA was about UAH 2,230 mln
(USD 80 mln) in the quarter.

Last week, the company’s acting CEO reported that
Ukrainian Railways’ bottom line turned to positive numbers starting in 2Q, with
net income reaching UAH 35 mln in April and UAH 39 mln in May.

According to its financial plan for 2021, the company
is going to reach UAH 3,641 bln of net profit this year, with most of the
contributions to the profit to be made in the fourth quarter.

Alexander Paraschiy: With the gradual removal of quarantine restrictions in spring and the
expected increase of demand for freight transportation in 2Q-3Q, the company’s
top and bottom line will improve significantly in these quarters. While it is
unlikely that the company will reach its planned annual results, this year
should be much better for the company’s operations and P&L. However, due to
its large capex appetite and the need to repay debts, the company’s liquidity
issue will remain throughout the year, unless it secures large debt financing.
We remain neutral on RAILUA bonds.